Residents of the Dallas/Ft Worth Metroplex probably rolled their eyes at the news that Southwest is pushing for more freedom at Houston’s close-in Hobby airport. They’ve seen it all before with Southwest’s fight against American at Love Field, right? Not quite. This is a very different situation, but don’t worry, there is still legacy airline opposition to make it interesting. This time it’s United.
Houston has two airports with substantial commercial service. The behemoth is Intercontinental. On the north side of town, this was Continental’s home base and now remains one of United’s major hubs post-merger with flights all over the world. There is a heavy emphasis on Latin America, simply due to geography, but you’ll find flights to Europe and Asia as well.
Intercontinental opened in 1969 as a replacement for the old Hobby Airport on the south side of town. Hobby’s story sounds a lot like that of Love Field in Dallas. It’s an older airport (originally built in the 1920s) and it didn’t have room for the growth needed to sustain the Houston metro area. Unlike at Love, however, Southwest didn’t exist when Intercontinental opened.
In 1969 when the new shiny airport opened, all commercial service made the move, but Hobby stayed open for business with general aviation. Since everyone agreed to move, there was no massive, drawn out fight about who could fly where and when as we’ve seen up in Dallas at Love. When Southwest started up in 1971, I believe it even initially went into Intercontinental (though I’m sure someone will correct me if I’m wrong). It wasn’t long, however, before Southwest moved down to Hobby, where it developed a great little niche for itself.
From 1980 until 2005, Southwest actually served both airports, but it finally pulled out from Intercontinental completely in order to focus all efforts on Hobby. Other than Southwest, there are mostly just a few odds and ends at the airport. Frontier flies to Denver and JetBlue flies to New York. American does DFW and Delta goes to Atlanta. That’s about it.
While there has been plenty of noise up in the Metroplex as American and Southwest had fought out which restrictions should remain at Love, Houston was pretty quiet. That’s now changing.
See, Southwest wants to fly internationally and Hobby doesn’t have a customs and immigration facility. Uh oh. Now it’s time for trouble.
Southwest has decided to push hard on this with freehobbyairport.com. It says it wants to use a new 5 gate facility to fly to “Mexico, the Caribbean and the Northern cities in South America.” I should put the emphasis here on “wants” because Southwest still can’t fly internationally thanks to its backwards technology. The airline says that’ll change next year, but I don’t believe it. So really what we’re talking about right now is having AirTran fly internationally until Southwest gets its act together sometime down the road.
This seems like a no-brainer, doesn’t it? I mean, why wouldn’t you want to build a customs facility that will benefit the city and increase service levels? The city of Houston agrees, and that’s important because it runs both Intercontinental and Hobby. So everyone’s happy, right?
Hah, I think you know I wouldn’t be writing about this if that were the case. United is not happy. The airline is in the middle of investing in new facilities at Intercontinental and it is threatening doom and gloom.
United says it will hurt its traffic, and that could result in the city losing service. It also says that this will take away customs and immigration resources from Intercontinental, making for a worse experience for travelers there. Oh please.
These are always the arguments used to fight competition. American used even more ridiculous ones in the Love Field fight, so this shouldn’t be surprising. And it isn’t.
Really, if you’re United, wouldn’t you fight this? I mean, you certainly don’t want more competition, so you should put some effort into trying to keep it out. But in this case, it should be a losing battle. Hobby should get a customs facility, and I imagine that’s what we’re going to see happen.
[Original photo via Flickr user NeitherFanboy/CC 2.0]
74 comments on “United Hates Houston’s Plan for Two International Airports”
My favorite part about these things is just how far the legacy carrier has to stretch to try to come up with reasons why this isn’t a good idea. Like UA getting Lufthansa to say that a handful of flights to Mexico will kill the business case for the A380 coming to IAH. Or the idea that not only will it completely destroy the hub, but it will also be worse for passengers because they’re going to move all the customs officers to HOU (BTW, if the hub is destroyed, wouldn’t you need fewer customs officers anyway?) But probably the best is that they thawed out Gordo (and teamed him up with another pompous a** in Swelbar) to say that having two hubs will make each weak due to splitting traffic. However, if Southwest wants to come to IAH, then everything will be ok – two hubs in that situation is a good thing. Right, so two hubs across town causes doom and gloom, but if they’re in the same airport, then it’s cool.
Who writes this stuff for these guys?
You can add Boyd to that list :)
I wonder how WN is going to process bags internationally. Cause of our wonderful government, customs is done at first entry to US, so the bags need to come up and then recheck.
HOU needs FIS and we all know it.
No doubt, when hasn’t Boyd carried the water for major carriers? Thank goodness for forums like this and journalists like Brett and Joe Brancatelli who strive to report things from the PASSENGERS’ point of view.
Ted, in response to your point about Southwest’s operation being at IAH versus across town, that actually is a big deal for United.
If Southwest was to try to start some international flights from IAH, it would not be nearly as big a threat to United. Not that the legacy would appreciate WN infringing on historical Continental territory, but their operation there is massive and powerful enough that Southwest would have some trouble stealing market share.
However, by flying out of Hobby, Southwest’s product is much more differentiated that it ever could be at Intercontinental. A large number of Houstonians would much rather take a flight out of HOU than IAH (just as many from Dallas prefer Love field), both because it is closer to a lot of the population and is an easier and more enjoyable airport to be in.
This is not to say that I think this is a valid argument for not allowing international flights at Hobby; i fly into HOU a lot and I think it would be great. I am just saying that from United’s perspective, I think Southwest being at Hobby is a legitimate concern.
Yes indeed, this new HOU issue does seem reminiscent of the past Love Field issue, and the big common denominator is the “Fear, Uncertainty, and Doubt” (FUD) promulgated by the airline that doesn’t want to see the competition.
The Houston metro area is large enough to support international services from both HOU and IAH, just as EWR and JFK both serve the NYC area. HOU will never match the level of international service that IAH sees, mainly as a consequence of geography and HOU’s 7,600-foot long runways. HOU to Europe or Asia non-stop? Hardly. HOU to Central and northern South America? No problem from a 7,600-foot runway.
Despite the FUD-mongering to the contrary, international service from HOU will not cause international service at IAH to go “poof” and disappear. It’s quite probable that fresh competition will expand the overall market to the benefit of both airlines, and the new jobs it brings to HOU will help offset some of the jobs Houston saw exported to Chicago with United’s absorbing Continental.
Having a split hub for a city does slightly reduce connectivity – in that long-haul UA passengers are unable to easily switch to a short-haul Southwest flight and vice versa – so having everyone in one airport is a benefit.
However, I suspect that Houston is unlikely to be a major connection point for Southwest for many years, and those flying via Houston will likely use UA to go both to and from Houston.
The real reason behind this claim is that UA know they are too big to fit into Hobby and thus are forced to fly from Intercontinental, but that Southwest have a potential competitor advantage in being able to fly from an airport slightly nearer the middle of the city and by virtue of being the dominant airline at Hobby receive extra concessions (maybe the airport is more willing to refurbish the area that happens to be close to the Southwest check-in desks ?) instead of playing 2nd fiddle to UA.
Competition here is good – the big 800 lb gorilla in the room just wants to beat his chest a bit first.
I think Southwest wants Hobby to be a big connection point, which is why they want to start international service there. If all they were getting was O&D traffic, then they probably could go up to IAH, since people wouldn’t have connections to make.
Another problem for UA is that city leaders and a lot of people of Houston
Accidentally hit the dang send button. My last point is that there are a lot of hurt feelings in Houston over UA’s decision to move its headquarters up to Chicago, so I don’t see the city bending over backwards to show loyalty to an airline that took a lot of jobs north. If the headquarters were still in Houston, they might take this more seriously, but even then I doubt it.
You’re assuming Southwest interlines, which they don’t. So no one would do a SWA to UA connection if they were in the same facility.
But AirTran interlines, do they not? AirTran is the one that will be providing the international service.
David – I don’t think it’s an issue of United wanting to be at Hobby. Each airport is convenient or different sets of populations. I don’t think it’s as big of a difference as Love Field is vs DFW in Dallas, for example. But Hobby is a relic. It doesn’t have a very long runway so long haul operations are impossible. It’s really a niche airport.
As for United to Southwest connections, that just doesn’t happen and I can’t imagine we’d see a ton of that even if Southwest and United had an interline agreement.
If HOU’s admittedly shorter runways can support HOU-LAX and HOU-EWR flights, then they can surely support flights of the same (or even somewhat longer) duration that are headed in the directions of the Carribean, Central America, or northern South America. HOU-NRT or HOU-LGW? No way, but anything out to a 3-5 hour trip time should be no big deal.
David, Hobby is a big connecting city for Southwest. Not from an interline perspective, as the point has already been made that WN doesn’t do that, but within the airline it is. Just as an example, they route a large number of people flying out of Love field through Hobby to get to destinations where they are not allowed to fly from DAL.
Great write up! Down here in Houston we are held hostage by some of the highest fares in the nation…especially international. Even with WN going international there are many loyal UA fliers who won’t forsake their miles anyway – then there is the issue of convenience. Houston is so big that people living north of loop 610 would prefer IAH as opposed to those on the southern fringes. Its funny when I see the comments on a.net from folks who have no idea the distance we are talking about especially with our traffic here.
When I lived in Houston, I was fortunate enough to be about equal distance to both airports, so I did have a choice. But it makes me laugh when people talk about Hobby like it’s right down town. Yes, it is probably closer to downtown, but it is still outside the loop, and very inconvenient for people who live north
Here’s the smoking gun that just devastates United’s argument: Ft. Lauderdale (in the Miami metro) has vastly expanded discount international flying with airlines like Spirit and JetBlue, among others, yet over the last six years American has *doubled* the number of departures from its Latin America hub at Miami (source: http://www.thestreet.com/_yahoo/story/11009109/1/americans-miami-hub-is-reborn.html).
Definitely a lesson for Houston here. United?s threats to cut service are a smokescreen. Profits may drop, but service will only increase and fares will drop for the citizens of Houston.
My amusing April Fools post on the topic:
“Hobby to close, IAH turned over to United”
http://houstonstrategies.blogspot.com/2012/04/hobby-to-close-iah-turned-over-to.html
And here’s the link to the economic impact study done by independent consultants for the city, which shows overwhelming benefits to the city for internationalizing Hobby: http://c3430896.r96.cf0.rackcdn.com/economic-impact-study.pdf
As part of Southwest’s sales pitch they are saying that they are paying for the new international terminal. What they fail to point out is that the consumer is paying through an increase in the PFC from $3 to $4.50. So every person who flies out of Hobby (whether domestic or Intl or Southwest or not) will be paying for the terminal…not Southwest. A hidden tax increase to benefit Southwest.
PFC rates are set and collected by the airport, not the airlines.
So UA is fine going up against international traffic at ORD with AA and all the other airlines flying international service, and at LAX/SFO/EWR. But for some reason giant UA/CO thinks it can’t compete against WN at Hobby?
Oh wait after 75 years giant UA is pulling out of Oakland since WN is the number one carrier there and UA has cut back service over the years, so maybe WN starting international service out of HOU will cause UA to pull out of IAH and IAH become a ghost airport.
Or could it be prices would go down to the few common points WN would compete against UA at. CO/COX serviced a lot of Latin markets that WN could never compete in, so a few common point markets would not kill UA at IAH.
Grow up United and stop whining.
At the rate Southwest seems to be updating its technology, it won’t be able to codeshare or fly internationally for at least ten years. Maybe I’m being a bit sarcastic.
That is why they acquired AirTran.
I was including the AirTran acquisition in my estimate. It seems Southwest is in no hurry to update its IT systems post merger. Based on other integrations, codesharing should have easily been accomplished by now. AirTran codeshared with Skywest, didn’t it? The fact that Southwest’s IT system is as backward as it appears and that codesharing is going to take nearly another year is unfathomable to me. But I could be lacking in knowledge. By the way, I was also being more than a bit sarcastic about the ten years thing.
To the point of the article, I have no issue with Southwest / AirTran offering international service from Hobby.
Well, they could easily launch international service today if they wanted to, as AirTran flights. This is what they are doing at SNA. They can then convert them over to Southwest flights when their computers are ready. They won’t be able to get connecting passengers in the mean time, unless they introduce domestic AirTran flights from HOU, which is what they are doing at SNA (overlapping the most popular Southwest routes).
Ghost, it’s not that they aren’t trying, they just can’t do it. I have several friends who are working at WN trying to integrate the systems and according to them it’s a complete cluster. It will be a few years before they have the systems integrated, if ever. It’s even more perplexing considering one of the primary reasons that I’ve heard (from those same friends) for WN to purchase AirTran was to get their interline and codeshare systems. That doesn’t make any sense to me; why wouldn’t you just purchase new IT systems instead of paying $1.4B for an airline that doesn’t fit your fleet or model? Maybe WN has gotten so big and full of hubris that it’s started making the same bad business decisions for which the legacy carriers are infamous.
Am I the only one that thinks it’s really stupid to spend $1.4B to acquire an airline, that otherwise doesn’t fit your business model, simply to get their technology? Why not just buy the technology outright? You still have to pay for integration even if it’s great technology. Doesn’t make any sense to me.
My experience with UA whenever I’ve complained about anything, and I’m sure applicable to trying to understand UA in this matter, is:
1. “That’s what our customers want,” and/or
2. “We’re only doing it to serve our customers better.”
Recently, MEM spent gobs of.money redoing their customs facility. For what? DAL is ending its AMS service at the end of this summer. I’m wondering if SWA will be in some sort of agreement to make sure they stick to their promise and not flop the whole idea after millions are spent on nothing.
Why would MEM have done that? You didn’t have to be Karnac the Great to see the AMS flight could disappear and that there wasn’t much more intl after that.
Actually before the merger NW served Cancun, Montego Bay and Toronto daily along with intially KLM on the AMS flight. Also there were strong indications one of the first NW 787 routes was going to be MEM-NRT. Oh well such is life. And a side note, one poster said Hobby will never have flights to Europe. Back in the day KLM ran a daily DC-8 Hobby AMS flight-but I don’t know if they had a tech stop going to AMS to upload fuel-because those runways are short.
As a Native Houstonian, I personally take offense to United’s doom and gloom lost jobs scenario.
Smisek and the BOD chose Chicago over Houston for Merged United HQ and thousands lost/are losing their jobs as a result. As of now, the Houstonians don’t really see the “synergies” besides detriorating morale and quality of service.
If United wants to recapture some of the lost public credibility, they should play the Fairness Card as hard as possible. The single international gateway to Houston is part of the charter of IAH, and has been so since the airport opened; Southwest retreated from IAH, and now wants to change the rules.
Clearly, this is an uphill battle for United, and I don’t think they’ll win it. Fortunately for them though, I also don’t think Southwest is capable of the added intricacy of managing an international hub in Houston more than they are able to integrate reservation systems for a simple code share.
My message to United: check your message then sit on your hands because you can’t win this fight. Bide your time. Southwest isn’t infallible.
This is also what happened with the DFW-DAL fight except all flights were banned, not just International. When WN and the City of Dallas changed their mind, that’s when the Wright Amendment was hatched. WN is very adept at using it’s underdog persona to fight for rule changes that help it’s bottom line.
WN has been telling all of it’s employees that codeshare for FL’s flights would be available by summer. Since WN is moving some flights out of Atlanta back to FL and WN is now saying it cannot support flights with a leg on WN and FL until 2013, I assume that means codeshare is not available until 2013. Are things on the IT side so messed up that they really did not know until a couple of weeks ago that codeshares were going to be a problem?
Barry – Either the airline is so messed up that it really didn’t know, or it simply lied. One or the other. But sure enough, I’ve been told directly by Southwest multiple times that there would be codesharing this spring. Now it’s 2013 because it wasn’t a priority. Right.
I have to assume the problems are on the WN side. As I understand it, FL is using one of the off the shelf software packages for reservations and that system is pretty flixible. WN has done codeshares in the past so I am not sure what the problem is. The plan that has been told to the employees is the new schedule will continue to move flights over to WN flying and codeshare will be available in the spring. According to the messages the employees are hearing is the reason Airtran will still exhist in 2014 is for international flying. They doe not expect WN’s software to be able to handle international flying until 2014.
WN has been talking publicly about their software/IT problems for years. Why have they had their head in the sand all these years?
I have friends that work in WN’s IT department and they say it’s a mess. Having previously worked at larger airlines and aviation software companies, they say WN’s corporate culture is a big problem. Apparently WN might be suffering the same issues faced by many companies that grow rapidly and mature; a loss of nimbleness and forsaking decisiveness and risk-taking for “consensus-building”.
Living in California, I don’t really have a dog in this fight but on general principles I support WN and despise UA/CO. Needless to say, I signed up at http://www.freehobbyairport.com/ right away. Anything that helps the “bags fly free” airline is OK in my book.
As part of Southwest?s sales pitch they are saying that they are paying for the new international terminal. What they fail to point out is that the consumer is paying through an increase in the PFC from $3 to $4.50. So every person who flies out of Hobby (whether domestic or Intl or Southwest or not) will be paying for the terminal?not Southwest. A hidden tax increase to benefit Southwest.
A PFC is collected for the airport not the airline. The fact that PFC has been 3 instead of 4.50 is amazing as most urban airports have maxed out to the limit. I can only surmise HOU needs the extra revenue for such developments as the rental car centern taxi and runway improvements
This “hiddent tax” happens at all airports. Here in Atlanta we have paid huge “hidden taxes” that benefit Delta only. Also, in the case of HOU, there lions share of the traffic that pays the “hidden tax” are Southwest passengers.
PFCs are neither “hidden” nor “tax”. They are user fees paid by airport users to support specific capital infrastructure projects. At airports where one carrier dominates, such as Delta in ATL, it is true that Delta pax pay the most PFCs–but Delta pax also use the airport facilities the most, so that makes total sense. If you fly Delta via ATL, it’s in YOUR interest that there be ample gate and runway space to alleviate congestion. Since airports are not supported by general tax revenue, user fees mean only those who use the airport pay to support infrastructure.
Do we have responses from other HOU airlines? I can’t imagine airlines like F9 or B6 would be happy with charging their Customers more for Southwest’s benefit?
Is there anything they can do to fight it?
Noah – Well, Frontier is going back to Intercontinental, so that’s not going to matter. I imagine American and Delta don’t really care since this will hurt United more than it hurts them. And as for JetBlue, well, they might care but probably not. This is being paid for out of the PFCs and not out of the rate base.
Interesting that United didn’t say a word when MDW got a CBP facility early last decade. Granted the circumstances and management are different but it’s a similar scenario as HOU: smaller airport with limited capacity for long haul flights, and what would probably amount to a limited amount of competition on a handful of intl routes. WN would probably reduce some of UA’s yields but in no way would it cripple the IAH operation.
Just visited my friend in Houston. I’m not as lucky as Ben who lives near both airports. The place I stayed is a little near down town but it took some time and money to reach Hobby. It was really a great inconvenience especially for tourists like me.
Gotta love how the Houston city council members support or oppose the plan based on the proximity of their districts to HOU or IAH.
From Lamar Muse’s book”
“Having been a Houston resident all my life, I hardly gave a thought to service from Hobby Airport at the time we began operations in the Dallas-Houston market because I knew most Houston residents who flew lived in the southwestern and western parts of Houston. With the freeway system, Intercontinental, where all the other carriers were located, was about as convenient for them as Hobby was. Our onboard passenger surveys made it apparent, however, that there were half again as many Dallas passengers on our flights as there were Houston-based passengers. Therefore, proximity to downtown Houston, as opposed to its residential areas, took on added significance….After we decided, based on passenger surveys, to move half our flights to Hobby, we literally had to chase the bats out of the terminal…. Anyone familiar with the current Hobby…will have difficulty believing this. All of the improvements came because back in 1971, Southwest Airlines was going broke serving Houston Intercontinental Airport. Some years later, this lesson became ample reason for our refusal to move our Dallas operations from close in Love Field to the faraway Dallas-Fort Worth Regional Airport.”
A little bit unrelated, but I’m curious to know everyone’s thoughts on SW’s plans when the Wright Amendment expires in Dallas (2013, I believe). I kind of thought that a lot of the SW operations in and around Texas (Albuquerque, Little Rock, even Houston) would be downsized in favor of shifting to a focus on direct flights from their Dallas HQ; however, SW’s Hobby plan doesn’t seem to support my opinion…
As a Houston resident, I had the same concern, but the strict gate limits will keep them from expanding too much at DAL, and HOU is a very robust operation for them that I don’t see them pulling back, esp. with the growing animosity against UA in this town.
SW wants a monoploy out of HOU and it is the consumers and taxpers that are going to lose. Plenty of capacity at IAH but they dont want to compete with the other carriers.
Wow. So much wrong with so few words.
1) the new facility will be open to all carriers
2) It only makes sense if SWA can connect passengers from elsewhere thru their Hobby hub
3) There is actually *not* plenty of capacity at IAH, because UA’s Terminal B plans are to give it its own new customs and immigration facility.
I wouldn’t dismiss the issue of limited CBP resources as quickly as you did here, Brett. UA’s interest in this matter aside, opening up an entirely-new FIS facility anywhere means spreading existing, limited CBP resources thinner. Congress has made it clear that additional funding for CBP just isn’t going to happen, and while new technology has shown some promise of alleviating SOME of CBP’s resource shortage, there’s yet to be any evidence that technology can keep up with all of the growing gap. And, even if resources are not pulled from IAH to staff a HOU FIS for whatever reason, those resources will come from SOMEWHERE… it’s likely customers arriving via another port of entry will experience longer lines due to any FIS expansion or addition in the foreseeable future.
The City’s argument on this issue is razor thin and blindly optimistic at best. The reality is that, even if international flights are added elsewhere, it’s MUCH more efficient to add a few officer hours to an existing facility than to establish an entirely-new FIS (since so much of CBP’s operational costs are fixed). Since international growth is inevitable, the problem will exist no matter what — but opening-up a new FIS when CBP resources have been so firmly capped is only going to make that problem much, much worse. So, I’ll respectfully disagree with my colleagues at HAS on this one — since their gain may very well be our loss.
This whole CBP resources issue drives me nuts. Airports are swimming in money from passenger fees. Why can’t the feds just set the standards and let the airports pay for as many resources as they want? They will match to their needs *so* much better than a giant federal bureaucracy. Same argument applies to the TSA.
Oh, do I wish you were right about airports swimming in money. But, that couldn’t be farther from the truth. I’m not sure what “passenger fees” you are referring to, but if it’s PFCs, that money is federally restricted to FAA-approved capital projects that meet one of three statutory criteria. Those fees can’t be used for airport operations, and even if they could, airports would still need this (not unlimited) revenue stream for critical capital infrastructure projects.
Well, I know there are a whole range of fees they charge (gate leases, PFCs, etc.), and I’ve seen tons of perfectly fine, albeit a little aged, terminals get torn down and replaced with fancy new facilities, so the money is clearly there. Letting them allocated it to CBP or TSA equivalents instead of capital projects would improve everybody’s experience at the airport, even if some terminals have to go an extra few years before replacement.
UA is SO sour grapes! Get over it and pull up your “panties” and COMPETE in the UNregulated U.S. airline industry. If SW is going to have trans-boarder service, deal with it. Make your service BETTER. If you can’t, then figure out why you can’t. More often than not, a “bad” experience is a UA experience. But, the CO employees are most likely to make your travel experience better than average.
I do remember when Deregulation started and all carries were asking for new routes. BN went totally crazy and asked for everything from “here-to-there”.
Bought big planes and went Chapter 11 a few years later.
UA asked for one (1) route: BUF – MCO. Didn’t make much sense to me, and the ORD employees were not happy. If and ORD emp. wanted to go to MCO, they had to transit CLE and possibly be pulled off the A/C, since the “DUMB” UA NRSA policy was, a local with more seniority could “bump” a thru-psgr. How’s that for employee moral? Book a hotel in Orlando and spend 2 nts w/ the family in CLE, trying to get on an airplane.
Sw is inovative and looking for opportunities for the traveling public; i.e., NO bag FEES, NO rebooking FEE, shall I go on??? And, still the friendliest emps. in the industry – ANYWHERE.
Not that I feel sorry for United, but the deal was that IAH was to be the one and only international airport in Houston and now they’ve gone and kinda changed the rules in midstream on United and everybody else who flys out of IAH ?
The new competition @ Hobby will probably lower fares to certain cities in Mexico, but I wonder if it will also result in the reduction or even complete loss of some service to some really important long-haul destinations in places like South America ? United has got plenty of other hubs to connect flights to places like Rio and San Paulo, but Houston only has United to connect it those places in terms of non-stop service.
Won’t happen. American has doubled the size of its Miami hub even with lots of discount competition growth at FLL. United’s only true Latin America hub is Houston – they really don’t have much choice but to do those connections here. Yes, they have some flights from the northeast down there, but are they really going to connect the west and south through those hubs to Latin America? Not likely.
Actually, It was in Hobby’s Master Plan since 2003 for it to be an International Airport!
Someone might have said this already, but I read in June AirTran will start Chicago/Midway to Cancun. Does United not care about this or are they more concerned that out of Hobby, Southwest/AirTran can reach more of Latin America then they could out of Midway?
Sadly, it looks like United has bought off most of the Houston city council with campaign contributions, as they tear apart a very good, independent study done by the city’s aviation dept and consultants showing massive benefits to the city for opening up international competition at Hobby. Corruption just doesn’t get any more blatant. http://www.chron.com/news/houston-texas/article/Council-rips-study-painting-Hobby-expansion-as-3486551.php
Cranky, it would be great if you could expose this in the national press. Houston is very sensitive to its national image.
Here’s the story on The Street about UA’s puppeteering of the city council to push back against the study: http://www.thestreet.com/story/11499056/1/uniteds-biggest-hub-faces-attack-by-southwest.html?puc=yahoo&cm_ven=YAHOO
I would doubt the study too if the assumptions are along the lines of the $133 fare to Bogota. That’s just one data point but if similarly ridiculous fares were assumed for other destinations, it calls into question all traffic estimates.
Some of the expected fare reductions do look aggressive, esp. considering current oil prices. But the overall report is very thorough, and you can’t argue against the effects seen in other cities: lower fares stimulate traffic and create more service, not less. As an example, as Spirit and JetBlue have been ramping up discount intl service from FLL, AA has been doubling the number of departures from its MIA hub over the last six years.
Right but how much of that is simply because Latin America has been one of the fastest growing markets over that time period? Maybe AA’s departures would have tripled or even quadrupled without the competition at FLL? It’s impossible to know without an econometric analysis of the data, and even then each side would dispute the analysis. I didn’t read the IAH/HOU study but it sounds like maybe the process could have been more transparent. Did the consultants who prepared the study at least present different scenarios using multiple fare assumptions?
You’re welcome to check it out yourself: http://c3430896.r96.cf0.rackcdn.com/economic-impact-study.pdf
I think your MIA/FLL scenario is implausible vs. economics. A near-monopoly provider prefers higher prices and lower demand. Competition lowers prices and increases demand, therefore increasing service to meet that demand. There are lower profits than before, but more service and it’s better for the consumer. It’s really pretty simple.
The “Southwest effect” of demand stimulation has been known domestically for years. Why would it be any different for international?
Because Southwest no longer enjoys the cost and therefore pricing advantages they once had. See today’s headlines regarding expected profits.
United’s reason for opposing this plan is simple: they hold a monopoly on certain flights to and from Houston, and don’t want to lose it, to the detriment of passengers’ pockets. Case on point: United is the only airline that has a nonstop flight to and from Puerto Rico. A ticket can cost anywhere from $500 – 800, which is absolutely ridiculous, considering that a flight to and from cities such as NYC or Chicago can cost $250 – 300. Everytime I buy a ticket to PR from IAH I get so angry about paying an absurd amount of money, just because they don’t have real competition here.